The bidding war for Warner Bros. Discovery (WBD) and its extensive library of TV shows and movies like “Harry Potter,” “Game of Thrones” and DC Comics titles, continues.
The studio said Wednesday that its board unanimously rejected Paramount Skydance’s revised $108.4 billion offer, calling the proposal a “leveraged buyout” that would leave the company with $87 billion in debt.
In a letter to shareholders, WBD urged them to reject the offer, saying that the “extraordinary amount” of Paramount’s debt should increase the risk of the deal failing, and instead suggested that they vote. earlier, the $82.7 billion deal with Netflix for film and TV studios insist.
Paramount, which was rumored to be buying WBD before the Netflix deal was announced, went directly to WBD shareholders with all-cash, $30 per offer in early December after the Board of Warner Bros. decided to sell to Netflix. But WBD rejected Paramount’s offer, calling the offer “illusory” and saying that Paramount doesn’t have the money to make the claim, and instead recommending a cash and show deal for Netflix.
Paramount then returned with a $40 billion guarantee from CEO David Ellison’s billionaire father, Oracle co-founder Larry Ellison, and said it will raise $54 billion in debt to finance the deal.
WBD doesn’t seem to be convinced. “(Paramount) is a company with a market capitalization of $14 billion attempting an acquisition that requires $94.65 billion in debt and equity financing, almost seven times the total market capitalization (…) This aggressive transaction structure poses greater risks for WBD and its shareholders when compared to the conventional structure of the Netflix merger,” WBD wrote in the Netflix merger. statement.
Warner Bros. also questioned Paramount’s ability to stay afloat if the deal went through, arguing that raising the amount of debt would damage Paramount’s current “junk” credit rating.
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Warner Bros. is particularly concerned about Paramounts negative free cash flow, which will be greatly increased by the acquisition. “In contrast, Netflix is a company with a market capitalization of about $400 billion, an investment-grade balance sheet, an A/A3 credit rating and an estimated free cash flow of more than $12 billion for 2026,” WBD wrote.
Netflix welcome WBD’s decision, said after the merger, the company will “bring together complementary strengths and a shared passion for storytelling.”